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Let's assume Alice wrote a bestseller. Then she made a script from it. This script is then given to the movie studio in Hollywood, who contracts Director Bob to make the actual film. The studio doesn't have the greatest lawyers, so it signs conflicting contracts:

The contract between the studio and the author was written by the studio's lawyer, but the author demanded two provisions: It explicitly states that the studio or its employees and contractors may not alter the script (except for minimal things) without the written approval of the change by Alice, though it is not expressly said if said approval needs to be prior or could be gotten after the fact. The very next clause prescribes that if the approval provision is breached, the license to make and distribute the adaption is void without the need of further notice.

The contract of the studio with the Director was drafted by the Director's lawyer as his standard contract and the studio representative just signed it off after being handed it. It allows him artistic leeway over how to alter the script but never specifies what that means. It doesn't contain any damage clause. During the negotiation with the representative, Bob did not inquire about the licensing contract the studio had with Alice or the script author and thus didn't read it, though he could have gotten a copy if he had asked.

Filming starts, and Director Bob does as he does, starting to edit the script by altering the dialogue and merging characters as he sees fit, using what he calls artistic leeway. He also never sends his alterations to the studio to have them check them for approval by the author.

Then, Alice decides to request a pre-premiere of the film and is given so by the studio (Director Bob would never approve!). As a result, Alice discovers the substantial alterations and points out that the license was voided, prohibiting the distribution.

Which brings us to the questions of law of this situation:

  • Was the studio representative [grossly] negligent in granting Director Bob the artistic leeway clause, not expressly informing Bob about the licensing terms and not checking up on changes when it was bound to get approval for such by its contract?
  • Is Director Bob liable for the expenses and damages incurred by bringing the studio into the breach of its licensing contract?
  • Did, through the voiding of the license, the film become an unlicensed derivate and thus it is wilful copyright infringement? If so, at what moment did it become so?
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    Did Bob know, or should he reasonably have known, that his conduct would bring the studio into breach of the contract with Alice? – Nate Eldredge Aug 15 at 14:43
  • @NateEldredge Bob did not read the contract the studio had with the author and did not inquire, he just handed his 'standard contract' to the representative and said that's his terms. I hope the edit reflects this? – Trish Aug 15 at 14:45
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    I know this is a hypothetical - in actuality, the agreements between studios and authors are notorious for allowing any and all changes without regard to the author. – George White Aug 15 at 15:28
  • Often, but not always. – Trish Aug 15 at 15:41
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Was the studio [grossly] negligent in granting Director Bob the artistic leeway clause and not checking up on changes when it was bound to the contrary by its contract?

The studio (or its agent/representative, per your subsequent edit) was even reckless for agreeing to artistic leeway despite knowing that the production ought to adhere to Alice's script. The term artistic leeway denotes or implies permission to make non-negligible changes to the script. The contract between studio and director should have addressed the issue carefully.

Is Director Bob liable for the expenses and damages incurred by bringing the studio into the breach of its licensing contract?

The director cannot be liable for violating constraints which are missing in his contract with the studio. In fact, the term artistic leeway gives the misleading impression that the studio is not under such constraints.

Did, through the voiding of the license, the film become an unlicensed derivate and thus it is wilful copyright infringement? If so, at what moment did it become so? it is not expressly said if said approval needs to be prior or could be gotten after the fact

The film becomes an unlicensed derivate if Alice is not timely informed about the non-negligible changes the director made. Timely in this context refers to the possibility of rolling back the changes in the event that Alice rejects them.

The hypothetical scenario you outline is the converse of the movie example in section Practical Consequences of this page. Here, Alice took the precaution of requiring the second clause you mention.

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  • on Nate's request I had added some lines, which don't seem to alter the conclusions you get to, but you might give them a little look. – Trish Aug 15 at 14:58
  • @Trish I amended the answer regarding the contract ambiguity of when to seek approval from Alice. – Iñaki Viggers Aug 15 at 15:04
  • If let’s say Alice got 10 million for the license and it cost 30 million to create the unlicensed film, it’s up to Alice to walk away with 10 million and possibly sell the film rights to another company, or to get a lawyer who is also a very good negotiator and get a good amount of money for a license that allows the company to use the film as is. – gnasher729 Aug 15 at 18:04
  • @gnasher729 I agree. But walking away with the money forfeits Alice's entitlement to enforce the clause about written approval of changes. As a matter of equity or as per the statute of limitations, at some point she might be unable to even rescind the contract. And selling to another company her rights might make her liable to the buyer unless she made the buyer aware of the changes she knows --or diligently should know-- the changes made to the script. – Iñaki Viggers Aug 15 at 20:12
  • @IñakiViggers Yes, that was inaccurate. As the contract is described, it is not clear whether the approval provision was breached or not. So if she wants to walk away - with the money - she better gets a lawyer. On the other side, the film company most definitely cannot show the movie they produced without Alice's permission. – gnasher729 Aug 16 at 21:58

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